The challenge
New Zealand Steel, wishing to secure the long-term viability of steel making in New Zealand while also reducing its carbon footprint, is building a new $300m electric arc furnace (EAF) at its steelworks in Glenbrook, Auckland.
The project, known as 'Project Electron', is New Zealand's single largest emissions reduction project and will, when complete, see New Zealand Steel's current oxygen steel making furnace and two of its four coal-fuelled kilns replaced with the EAF – reducing New Zealand Steel's carbon footprint by $1m tonnes per annum – equal to taking 300,000 cars off the road permanently and equivalent to 1% of New Zealand's total annual emissions.
Our role
We acted for New Zealand Steel on all procurement, construction and power purchase arrangements in relation to Project Electron, including:
The drafting and negotiation of the primary supply contract with Danieli Co., Ltd for the design, supply and installation of an electric arc furnace, fume treatment plant and ancillary equipment – the legal aspects of which were particularly complex due to the international counterparty and the cutting-edge nature of the plant being supplied
The procurement and structuring and associated drafting and negotiation of the supporting enabling works package construction contracts – tendered, in each case, to the local construction market on a heavily adapted New Zealand standard form contract (to reflect and interface with the arrangements with Danieli Co., Ltd under the primary supply contract and the project more generally
The power purchase arrangements with Contact Energy – securing a reliable supply of firmed renewable energy for the EAF once installed and providing important production flexibility to enable New Zealand Steel to scale down production at times of peak demand and supply
The drafting and negotiation of agreements with Simsmetal (as primary scrap metal supplier) and KiwiRail (as rail service provider) for certain works and services to enable the delivery of scrap metal feedstock for the EAF.
Result
Project Electron is expected to achieve significant environmental benefits and position New Zealand Steel for future growth and sustainability initiatives. The success of this procurement will demonstrate the company's commitment to innovation and sustainable practices, paving the way for future projects aimed at further reducing their environmental impact. The EAF will help to secure steelmaking in New Zealand for many years to come, working towards meeting the country’s goal of net-zero emissions by 2050.
Our engagement on this project demonstrates our position as a provider of choice for New Zealand's most high-profile, complex and technically challenging construction projects.